Did the SEC just end any green light to another ICO cycle?
The Securities and Exchange Commission (SEC) announced on Monday 30th Sept a settlement against Block.one for conducting an unregistered initial coin offering (ICO) for the EOS platform.
Block.one has agreed to pay $24 million, relating to their ICO between 2017 to 2018, which raised a total of $4.1 billion.
The fine amounts to 0.0058% of the amount raised through ICO and is being touted by some as early indications to a hands off regulatory approach that adds a small cost of doing business to ICO projeccts and their fundraising although Nic Carter sees things differently.
From the SEC website
The SEC’s order finds that Block.one violated the registration provisions of the federal securities laws and requires it to pay a $24 million civil monetary penalty. Block.one consented to the order without admitting or denying its findings.
“Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering,” … “The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions.”Division of Enforcement, Steven Peikin
After the ruling EOS released a statement on their website
We are excited to resolve these discussions with the SEC and are committed to ongoing collaboration with regulators and policy makers as the world continues to develop more clarity around compliance frameworks for digital assets.
Looking deeper into this Nic Carter suggested that this light touch ruling may be due to other regulatory FinCEN agencies having claimed the ‘turf’ and may be going after Block.one.
Block.one seems to have close relationships with government bodies, which in part may have led to the ruling. Just last week, the Commonwealth of Virginia gave a $600k grant to Block.one to assist construction of its U.S. headquarters in Arlington, a suburb of Washington DC.
Alongside unfavorable market conditions, regulation on ICO and IEO’s has been the main factor for the downturn in funds raised for these projects post 2018.
It remains to be seen if the recent ruling around the EOS ICO and the relatively paltry settlement figure could open the door for projects to resume fundraising via ICO and IEO’s, wait for more regulated fundraising models such as STO’s, or whether projects will favor non regulated funding models such as private investment.